Globalization is entering a new phase as most of the hype surrounding emerging markets like the BRIC (Brazil, Russia, India, and China) countries dies down. Recent evidence points to the end of rapid growth in the BRICs, as real gross domestic product (GDP) growth for each of those countries has slowed considerably. China is the only one of the four that seems to be holding on; its 2012 growth came in at 7.7 percent, and its growth for 2013 is likely to end up slightly below the 8-percent mark. The others are struggling, however. Russia's economic well-being is closely tied to the ups and downs of world oil markets, and India faces a much slower economic growth rate despite strong population growth. Meanwhile, Brazil's real GDP growth for 2012 stood at 0.9 percent and is likely to reach only 2.4 percent in 2013.
The "giant sucking sound"
In a 1992 debate, an independent presidential candidate, Ross Perot, made the famous remark that the proposed North American Free Trade Agreement (NAFTA) would cause Americans to lose jobs to Mexico—a situation he described as "a giant sucking sound going south." NAFTA, which came into effect in early 1994, opened up the borders for trade between its signatories: Canada, Mexico, and United States. The ultimate goal of NAFTA was to reduce, and eventually eliminate, most U.S.-Mexico trade barriers.
However, during the 1990s, when Americans like Perot feared that production would shift to Mexico, much of it actually went to China. One of the factors that helped China increase its export manufacturing was its admission into the World Trade Organization (WTO). In fact, a closer look at the nominal (before adjusting for exchange-rate changes and price differences) share of U.S. imports from various countries makes a compelling case that China's WTO entry and its relatively inexpensive, unskilled labor played a very strong role in the rapid growth of Chinese imports into the United States. In 1996, for example, Mexican exports accounted for 9.2 percent of the U.S. import market, while China's share was a tad below 8 percent. Mexican and Chinese import shares increased to 12.1 percent and 11 percent, respectively, by 2001, while Canadian and Japanese shares of U.S. imports dropped. (See Figure 1.)
Since China's entry into the WTO in late 2001 and continuing to the present, there has been a symbiotic relationship between China and the United States. Harvard University professor Niall Ferguson calls this relationship "Chimerica" (China+America) in his book The Ascent of Money: A Financial History of the World. In essence, he writes, the Chinese are saving and Americans are spending; the Chinese are exporting and Americans are importing; the Chinese are building up reserve funds by means of currency manipulation and Americans are piling on debt.
China was able to quickly outpace Mexico in exports to the United States, while U.S. competitiveness declined due to high wages and costs in labor-intensive industries such as clothing, certain types of machinery, and many types of low-value-added consumer goods. Many multinational corporations found it more cost-effective to relocate manufacturing and assembly plants from the United States and Mexico to China. Between 2001 and 2005 Mexico's share of U.S. imports fell from 12.1 percent to 10.4 percent, while China's share rose from 11 percent to 19.2 percent. The "giant sucking sound" was not coming from the South but from the Far East.
However, in 2005 Mexico began to regain its competitiveness in many sector-level areas of production, such as automotive, electronic equipment, and higher-end consumer goods. By 2009 China's share of U.S. imports started to level off at around 25.5 percent, while Mexico's increased by almost 3 percentage points to reach 13.1 percent by the second half of 2013.
A comeback for Mexico's export sector
Four main factors have contributed to the recent revival of Mexico's export sector:
Narrowing wage gap between China and Mexico. China's manufacturing wage inflation has been increasing at a considerably faster pace than in many other emerging markets. In addition, the appreciation of China's currency also restrains export growth. Meanwhile, Mexico's manufacturing wage growth, adjusted for nominal wage increases and peso fluctuations, has been relatively modest. Moreover, the peso has actually depreciated in recent years.
Trans-Pacific shipping rates. The high cost of ocean shipping, including fuel and equipment rental costs, are another consideration that explains why many multinational corporations are locating plants just across the border. In addition, the north-south transportation infrastructure has improved significantly over the past two decades, making surface transportation from Mexico to the United States faster and more cost-effective.
NAFTA and free-trade policy. Mexico's rule of law is sometimes questionable given the level of drug-related violence there. But most Mexican governments have had a liberal free-trade policy, and the country has been very diligent in adhering to international standards for intellectual property rights, especially since the NAFTA treaty went into effect.
Many multinational corporations are eyeing the relative strength of the Mexican economy in regard to demographics as a reason to increase production to serve that nation's domestic market. The rise of the Mexican middle class, increased levels of educational attainment, and lower fertility rates are all strengthening the consumer base. Both U.S. and international supply chain managers should take Mexico and its economy into consideration when making strategic decisions. Although China and India will still play a key role in world growth over the next decade, Mexican exports to the United States will continue to rise, and Mexico will grab a greater share of imports from other major U.S. trading partners.
The launch is based on “Amazon Nova,” the company’s new generation of foundation models, the company said in a blog post. Data scientists use foundation models (FMs) to develop machine learning (ML) platforms more quickly than starting from scratch, allowing them to create artificial intelligence applications capable of performing a wide variety of general tasks, since they were trained on a broad spectrum of generalized data, Amazon says.
The new models are integrated with Amazon Bedrock, a managed service that makes FMs from AI companies and Amazon available for use through a single API. Using Amazon Bedrock, customers can experiment with and evaluate Amazon Nova models, as well as other FMs, to determine the best model for an application.
Calling the launch “the next step in our AI journey,” the company says Amazon Nova has the ability to process text, image, and video as prompts, so customers can use Amazon Nova-powered generative AI applications to understand videos, charts, and documents, or to generate videos and other multimedia content.
“Inside Amazon, we have about 1,000 Gen AI applications in motion, and we’ve had a bird’s-eye view of what application builders are still grappling with,” Rohit Prasad, SVP of Amazon Artificial General Intelligence, said in a release. “Our new Amazon Nova models are intended to help with these challenges for internal and external builders, and provide compelling intelligence and content generation while also delivering meaningful progress on latency, cost-effectiveness, customization, information grounding, and agentic capabilities.”
The new Amazon Nova models available in Amazon Bedrock include:
Amazon Nova Micro, a text-only model that delivers the lowest latency responses at very low cost.
Amazon Nova Lite, a very low-cost multimodal model that is lightning fast for processing image, video, and text inputs.
Amazon Nova Pro, a highly capable multimodal model with the best combination of accuracy, speed, and cost for a wide range of tasks.
Amazon Nova Premier, the most capable of Amazon’s multimodal models for complex reasoning tasks and for use as the best teacher for distilling custom models
Amazon Nova Canvas, a state-of-the-art image generation model.
Amazon Nova Reel, a state-of-the-art video generation model that can transform a single image input into a brief video with the prompt: dolly forward.
Economic activity in the logistics industry expanded in November, continuing a steady growth pattern that began earlier this year and signaling a return to seasonality after several years of fluctuating conditions, according to the latest Logistics Managers’ Index report (LMI), released today.
The November LMI registered 58.4, down slightly from October’s reading of 58.9, which was the highest level in two years. The LMI is a monthly gauge of business conditions across warehousing and logistics markets; a reading above 50 indicates growth and a reading below 50 indicates contraction.
“The overall index has been very consistent in the past three months, with readings of 58.6, 58.9, and 58.4,” LMI analyst Zac Rogers, associate professor of supply chain management at Colorado State University, wrote in the November LMI report. “This plateau is slightly higher than a similar plateau of consistency earlier in the year when May to August saw four readings between 55.3 and 56.4. Seasonally speaking, it is consistent that this later year run of readings would be the highest all year.”
Separately, Rogers said the end-of-year growth reflects the return to a healthy holiday peak, which started when inventory levels expanded in late summer and early fall as retailers began stocking up to meet consumer demand. Pandemic-driven shifts in consumer buying behavior, inflation, and economic uncertainty contributed to volatile peak season conditions over the past four years, with the LMI swinging from record-high growth in late 2020 and 2021 to slower growth in 2022 and contraction in 2023.
“The LMI contracted at this time a year ago, so basically [there was] no peak season,” Rogers said, citing inflation as a drag on demand. “To have a normal November … [really] for the first time in five years, justifies what we’ve seen all these companies doing—building up inventory in a sustainable, seasonal way.
“Based on what we’re seeing, a lot of supply chains called it right and were ready for healthy holiday season, so far.”
The LMI has remained in the mid to high 50s range since January—with the exception of April, when the index dipped to 52.9—signaling strong and consistent demand for warehousing and transportation services.
The LMI is a monthly survey of logistics managers from across the country. It tracks industry growth overall and across eight areas: inventory levels and costs; warehousing capacity, utilization, and prices; and transportation capacity, utilization, and prices. The report is released monthly by researchers from Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals (CSCMP).
Specifically, 48% of respondents identified rising tariffs and trade barriers as their top concern, followed by supply chain disruptions at 45% and geopolitical instability at 41%. Moreover, tariffs and trade barriers ranked as the priority issue regardless of company size, as respondents at companies with less than 250 employees, 251-500, 501-1,000, 1,001-50,000 and 50,000+ employees all cited it as the most significant issue they are currently facing.
“Evolving tariffs and trade policies are one of a number of complex issues requiring organizations to build more resilience into their supply chains through compliance, technology and strategic planning,” Jackson Wood, Director, Industry Strategy at Descartes, said in a release. “With the potential for the incoming U.S. administration to impose new and additional tariffs on a wide variety of goods and countries of origin, U.S. importers may need to significantly re-engineer their sourcing strategies to mitigate potentially higher costs.”
Grocers and retailers are struggling to get their systems back online just before the winter holiday peak, following a software hack that hit the supply chain software provider Blue Yonder this week.
The ransomware attack is snarling inventory distribution patterns because of its impact on systems such as the employee scheduling system for coffee stalwart Starbucks, according to a published report. Scottsdale, Arizona-based Blue Yonder provides a wide range of supply chain software, including warehouse management system (WMS), transportation management system (TMS), order management and commerce, network and control tower, returns management, and others.
Blue Yonder today acknowledged the disruptions, saying they were the result of a ransomware incident affecting its managed services hosted environment. The company has established a dedicated cybersecurity incident update webpage to communicate its recovery progress, but it had not been updated for nearly two days as of Tuesday afternoon. “Since learning of the incident, the Blue Yonder team has been working diligently together with external cybersecurity firms to make progress in their recovery process. We have implemented several defensive and forensic protocols,” a Blue Yonder spokesperson said in an email.
The timing of the attack suggests that hackers may have targeted Blue Yonder in a calculated attack based on the upcoming Thanksgiving break, since many U.S. organizations downsize their security staffing on holidays and weekends, according to a statement from Dan Lattimer, VP of Semperis, a New Jersey-based computer and network security firm.
“While details on the specifics of the Blue Yonder attack are scant, it is yet another reminder how damaging supply chain disruptions become when suppliers are taken offline. Kudos to Blue Yonder for dealing with this cyberattack head on but we still don’t know how far reaching the business disruptions will be in the UK, U.S. and other countries,” Lattimer said. “Now is time for organizations to fight back against threat actors. Deciding whether or not to pay a ransom is a personal decision that each company has to make, but paying emboldens threat actors and throws more fuel onto an already burning inferno. Simply, it doesn’t pay-to-pay,” he said.
The incident closely followed an unrelated cybersecurity issue at the grocery giant Ahold Delhaize, which has been recovering from impacts to the Stop & Shop chain that it across the U.S. Northeast region. In a statement apologizing to customers for the inconvenience of the cybersecurity issue, Netherlands-based Ahold Delhaize said its top priority is the security of its customers, associates and partners, and that the company’s internal IT security staff was working with external cybersecurity experts and law enforcement to speed recovery. “Our teams are taking steps to assess and mitigate the issue. This includes taking some systems offline to help protect them. This issue and subsequent mitigating actions have affected certain Ahold Delhaize USA brands and services including a number of pharmacies and certain e-commerce operations,” the company said.
Editor's note:This article was revised on November 27 to indicate that the cybersecurity issue at Ahold Delhaize was unrelated to the Blue Yonder hack.
The new funding brings Amazon's total investment in Anthropic to $8 billion, while maintaining the e-commerce giant’s position as a minority investor, according to Anthropic. The partnership was launched in 2023, when Amazon invested its first $4 billion round in the firm.
Anthropic’s “Claude” family of AI assistant models is available on AWS’s Amazon Bedrock, which is a cloud-based managed service that lets companies build specialized generative AI applications by choosing from an array of foundation models (FMs) developed by AI providers like AI21 Labs, Anthropic, Cohere, Meta, Mistral AI, Stability AI, and Amazon itself.
According to Amazon, tens of thousands of customers, from startups to enterprises and government institutions, are currently running their generative AI workloads using Anthropic’s models in the AWS cloud. Those GenAI tools are powering tasks such as customer service chatbots, coding assistants, translation applications, drug discovery, engineering design, and complex business processes.
"The response from AWS customers who are developing generative AI applications powered by Anthropic in Amazon Bedrock has been remarkable," Matt Garman, AWS CEO, said in a release. "By continuing to deploy Anthropic models in Amazon Bedrock and collaborating with Anthropic on the development of our custom Trainium chips, we’ll keep pushing the boundaries of what customers can achieve with generative AI technologies. We’ve been impressed by Anthropic’s pace of innovation and commitment to responsible development of generative AI, and look forward to deepening our collaboration."